Wycombe District Council Viability Assessment May 2017 Contents Executive Summary 4 1. Introduction 11 2. The Council’s Current Policy Position 16 3. Methodology 17 Housing Numbers Appraisal Modelling Viability and Viability Thresholds Premiums and Buffers in relation to existing use values Profit Density and Housing Mixes Build Costs Other Valuation Inputs Affordable Housing Sales Values Community Infrastructure Levy (CIL) Methodology relating to Strategic Sites 4. Findings 28 5. Conclusions 31 6. Recommendations 32 Wycombe District Council - Viability Assessment – Updated Report – May 2017 Page| 2 Appendices 1: Assumed housing mixes at various affordable proportions based on floor areas. 2: Assumptions made about the strategic sites. 3: Strategic sites housing mixes based on floor areas. 4: Tables of sales research. 5: Value points tables. 6: Land values and surpluses over existing use value for the strategic sites. 7: These tables extract figures from the appraisals for the strategic sites, showing the different appraisal inputs, resulting in the surpluses over existing use value, as shown. Appendices showing the land value outcomes for the notional sites and comparing these outcomes to the assumed existing use value thresholds, to assess viability. 8: Notional sites based on floor areas 9: Notional sites based on floor areas with unit sizes based on technical housing standards 10: Notional sites based on floor areas – with biodiversity offset 11: Notional sites based on floor areas – with Category 2 to all units 12: Notional sites based on floor areas – with Category 2 to all units and category 3 to 30% of any affordable homes and 20% of market homes Wycombe District Council - Viability Assessment – Updated Report – May 2017 Page| 3 Executive Summary 1. This viability assessment provides support to the Council in developing and bringing to adoption a new Local Plan. It considers the viability of a number of development scenarios, using both notional and proposed strategic sites. 2. This is an update of our previous viability report produced in July 2016 and is a whole plan viability assessment in line with NPPF/NPPG requirements. 3. Viability testing is an important part of the Development Plan making process. The requirement to assess viability forms part of the National Planning Policy Framework (NPPF) and is a requirement of the CIL Regulations. In each case the requirement is slightly different but all have much in common. 4. In March 2012 the Government published National Planning Practice Guidance (PPG), in the form of a website. The PPG is a live document that is subject to regular updating and change. It cancels a number of pre- existing guidance documents and contains sections on plan making, viability and CIL. The PPG does not alter the NPPF. 5. The NPPF introduced a requirement to assess the viability of the delivery of Local Plans and the impact on development of policies contained within it. The NPPF includes the following requirements (with our emphasis): 173. Pursuing sustainable development requires careful attention to viability and costs in plan making and decision-taking. Plans should be deliverable. Therefore, the sites and the scale of development identified in the plan should not be subject to such a scale of obligations and policy burdens that their ability to be developed viably is threatened. To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable. 174. Local planning authorities should set out their policy on local standards in the Local Plan, including requirements for affordable housing. They should assess the likely cumulative impacts on development in their area of all existing and proposed local standards, supplementary planning documents and policies that support the development plan, when added to nationally required standards. In order to be appropriate, the cumulative impact of these standards and policies should not put implementation of Wycombe District Council - Viability Assessment – Updated Report – May 2017 Page| 4 the plan at serious risk, and should facilitate development throughout the economic cycle. Evidence supporting the assessment should be proportionate, using only appropriate available evidence. 6. The duty to test in the NPPF is a ‘broad brush’ one saying ‘plans should be deliverable’. It is not a requirement that every individual site should be able to bear all of the local authority’s requirements – indeed there may be some sites that are made unviable once the adopted and proposed policies are applied to them. It is not the purpose of this assessment to be applied to every single site that might come forward or that is proposed for allocation– this will be a matter that is dealt with at the development management stage of the planning process. This assessment seeks to assess a number of typologies of sites that are typical in the local authority area to assess if they are able to bear whatever target or requirement is set and the Council should be able to show, with a reasonable degree of confidence, that the Development Plan is deliverable. 7. We have factored into the viability assessment implications of the Council’s existing (DSA) and emerging (LP) policies. 8. We have updated our own sales research from which we believe that three geographical locations can be justified. These would be: a. High Wycombe/Stokenchurch b. Princes Risborough/Bourne End c. Marlow and remaining areas. 9. The notional sites include allowances for CIL and S106 costs, but do not include any allowances for further roads and services infrastructure. To this extent, they are assumed to be serviced sites. 10. The following paragraphs summarise the outcomes to the report. 11. With regard to the notional sites, we are looking for viability in locations such as High Wycombe and Stokenchurch, when assessed against existing employment and Greenfield uses; as these areas represent the average / “normal” values for the District and will be where 50% of the development will take place. The rest of the development will be in the higher value areas. 12. The outcome of the study shows that these locations are viable at the Council’s current levels of both CIL and affordable housing requirements (40% on greenfield and employment sites) having factored in the Council’s policies which include the latest housing technical standards; biodiversity offsetting, car parking standards and open space requirements. This is illustrated in the appendices, with 30% and 40% affordable housing. Wycombe District Council - Viability Assessment – Updated Report – May 2017 Page| 5 13. The tenure mix has been revised and is now based on the following tenure mixes. 14. The following scenarios were tested in relation to the affordable housing element: • 66/34 split of affordable rent/shared ownership and • 80/20 split based on the final Housing and Economic Development Needs Assessment (HEDNA) findings • All the rented properties should be affordable rent set at 80% of market value (but no higher than the local housing allowance). 15. The viability appraisals were carried out on the basis of floor areas. 30% affordable housing refers to 30% of the total floor area of the scheme. At value point 2 and 30% affordable, we see good viability against all Greenfield, employment and higher uses. At 40% affordable, we see a similar outcome, although viability against the higher residential intensification land benchmark is more marginal. 16. It is evident that there are some viability difficulties when assessed against residential intensification uses, in most scenarios, particularly in lower value locations. This need not necessarily be a problem, if the Council is not relying upon existing residential land for future housing supply. 17. We have concluded, therefore, that the Council can retain its current policy levels of affordable housing. 18. We also carried out additional appraisals to investigate the impact of applying the average unit sizes based on the technical housing standards for market and affordable dwellings and the impact of applying a pro rata biodiversity offsetting scheme cost of £10,000 per ha on each of the scenarios. Including these did not affect the viability in terms of the level of affordable housing. 19. We carried out further appraisals to show the impact of applying the technical standards for access. This looked at what the impact would be of applying category 2 to all homes and category 3 to 30% of any affordable homes and 20% of any market homes. The results of this show that the Council can maintain its current policy requirements for affordable housing. 20. The benchmark land value thresholds that we use to assess viability in this report are as follows: Agricultural existing use £400,000 per hectare Wycombe District Council - Viability Assessment – Updated Report – May 2017 Page| 6 Commercial/employment existing use: Reflecting a level of abnormal costs: £1,700,000 per hectare With no abnormal costs: High Wycombe/Stokenchurch/Marlow £1,400,000 per hectare Remaining areas £950,000 per hectare Residential existing use £2,000,000 per ha, to £4,000,000 per ha. 21. Profit 22. We are aware of the common levels of profit that might be adopted in the industry and, based on these, we have adopted 20% of sales revenue for the market housing and 6% of revenue for the affordable housing. 23. Densities and Housing Mixes 24. It was agreed with the Council that we would test the notional sites at densities of 30 and 50 dwellings per hectare, in order to provide a range of sites that might come forward in the future. 25. We also included additional appraisals showing the application of a lower density threshold of 25 per ha but retaining the same numbers of units to reflect new car parking standards and a tree canopy coverage policy.